Obamacare Repeal Complicates Effort to Undo Medicare Cost Panel

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Alex Ruoff

The growing partisan divide over the future of Obamacare may prevent repeal of a controversial Medicare cost-cutting provision that both Democrats and Republicans agree should be overturned, health lobbyists and researchers told Bloomberg BNA recently.

The Independent Payment Advisory Board, or IPAB, was created by the Affordable Care Act, and it may take on added importance this summer, when federal officials release the latest Medicare spending projections. The board can cut Medicare spending without approval by Congress, which prompted Republicans to label it a “death panel” and sparked worries among physicians’ groups about where the cuts would fall.

Republicans like Senate Majority Whip John Cornyn (R-Texas) and Rep. Phil Roe (R-Tenn.) have led the charge to repeal IPAB. However, to pass a repeal lawmakers may need to find as much as $7 billion in cuts to Medicare spending and find support from some Senate Democrats, who have bristled at being left out of Obamacare repeal talks.

“It’s a prime example of how the legislative process can be overtaken by demons of its own creation,” Pete Sepp, president of the National Taxpayers Union, told Bloomberg BNA May 31.

IPAB was created to lower Medicare spending if the per-person expense for medical services ever reached a certain threshold. The Centers for Medicare & Medicaid Services noted in 2016 that the panel would likely be triggered in 2017 by an expected rise in Medicare spending.

The 15-member IPAB panel has never been convened and has no members. Neither President Barack Obama nor President Donald Trump has nominated any IPAB members.

Determination Coming

The CMS’s chief actuary is expected in coming weeks to determine if Medicare spending has reached the point where IPAB would be triggered, Kip Piper, a consultant who specializes in Medicare and Medicaid policy, told Bloomberg BNA May 31.

This determination will outline how much money the IPAB panel will need to cut from Medicare, he said. If the IPAB panel isn’t formed, which is likely, then the head of the Department of Health and Human Services, Tom Price, will be tasked with finding spending cuts and implementing them.

This would put Price into a difficult bind: He would be required under law to cut Medicare spending, which Trump has repeatedly vowed not to do.

Just the threat of Medicare cuts is likely to set off alarm bells among physicians and the drug and medical device industries, which received much of the $646 billion in Medicare beneficiary payments in 2015.

“It’s a very large program, so there’s places where you could save a few billion dollars,” Piper said. “It’s just that no one wants it to come from them.”

A major concern is that IPAB or the HHS secretary would have to find the cuts through changes like reducing Medicare payments for physician services and prescription drugs, instead of making changes in Medicare policy that could save the program money, Sepp said. The ACA specifically requires the cuts to come at least in part from Medicare Advantage or Medicare Part D, the prescription drug benefit program.

“IPAB is not a vehicle for long-term reforms that will get the program on a sustainable footing,” Sepp said.

The triggering of IPAB will bring the issue to a head, likely focusing lawmakers to act quickly to stop the process, congressional staffers and health lobbyists told Bloomberg BNA.

Repeal Bills Filed

Both Roe and Cornyn filed legislation to repeal IPAB earlier this year, but no committees have acted on the bills. Sen. Ron Wyden (D-Ore.), the ranking Democrat on the Senate Finance Committee, has also filed a bill to repeal IPAB.

In the Senate, lawmakers appear divided along party lines. Wyden’s bill (S.251) has only Democrats as co-sponsors and Cornyn’s bill (S. 260) has only Republican co-sponsors. While both want to repeal the IPAB provision, they have vastly different reasons for doing so.

Wyden wants to head off any attempts by the Trump administration to cut Medicare spending without input from Congress, a Democratic staff member from the Senate Finance Committee told Bloomberg BNA May 30.

Cornyn, when he introduced his legislation in February, blamed the ACA for trying to give too much power to “unaccountable bureaucrats.”

Roe and Wyden’s bills are fast-track legislation permitted under the ACA to pass with only a simple majority. However, it’s unclear whether lawmakers will want to offset the cost of repealing IPAB, estimated between $7 billion and $15.9 billion.

Roe’s staff believes IPAB can be repealed without offsets. However, two Republican staffers told Bloomberg BNA that House leadership hasn’t decided if it will support legislation that doesn’t include an offset. If Republican leaders want a budget-neutral bill, they will need to find changes to Medicare policy or spending.

Estimates of the size of these cuts differ: The Congressional Budget Office originally projected IPAB would reduce Medicare spending by $15.9 billion, while the Trump administration’s estimate from May was $7.1 billion. If Medicare spending increases just above the threshold to trigger IPAB, the cuts could be just a few billion dollars.

In previously years, Republicans have looked to attach IPAB repeal to other health bills, such as medical malpractice reform, to combine estimated savings for Medicare and estimated increases in Medicare spending caused by the absence of the panel, Chris Sherin, director of congressional affairs for the American College of Radiology, a group that supports repeal of IPAB, told Bloomberg BNA June 1.

However, this is unlikely to occur this year because it would require support from at least eight Democrats in the Senate, he said.

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.